Dealing with Adversity

This year, IIMs should take pride in a 100 per cent placement record. It was hard work

Once upon a time, when Lehman Brothers was lording over Wall Street, and when CDOs, ‘bistros’ and ‘super senior’ hadn’t become cuss words, even the summer placements at IIMs made big news. What was essentially an eight-month internship with a stipend had become a curtain raiser to the Big Event—Day Zero. Some IIMs even started handing out press releases highlighting stipend offers that seemed bigger than the annual salary for most. When the real deal happened in early March, investment banking giants Goldman Sachs and Lehman Brothers wouldn’t mind forking out in excess of Rs 20 lakh a year for an IIM-A grad. Even HLL, now Hindustan Unilever, once the gold standard for anyone interested in marketing, had ceded ground inside the campuses to I-banks and blue-chip management consultancies such as McKinsey & Co and Bain.

In such a world, if anyone told IIM students to consider working for a state-owned bank, they’d positively gag at the idea. But the world has changed and how. Union Bank of India, a PSU bank, was one of the biggest recruiters at almost all IIMs. It managed to pick up 18 students from IIM-A alone. The ambitious PSU bank that aims to become the second largest in India, made the best bargains in a year when offers came in a relative trickle. “The year 2009 was very bad for us because we really had to put in the extra effort to make sure everyone was placed in quick time. The alumni were asked to get involved, and fortunately for us, public sector undertakings took what I’d call a non-traditional view. They recruit people laterally, on a contractual basis, which was important because otherwise they could not have afforded it, given their compensation standards,” says Samir Barua, director, IIM-A.

In the past, in PSUs, especially the banks, lateral recruitment for middle management was something that was unheard of. People had to start at the lowest rung and gradually work their way up in the organisation. But taking IIM grads on a two- or three-year contract now allows PSUs like Union Bank to bring in some compensation flexibility and compete in the talent market with private players on level terms.

This year, besides Union Bank, some of the major recruiters at IIMs included Bank of Baroda, NTPC, the market regulator Sebi and even government agencies like the Planning Commission. “Having opened the window to recruiting from the IIMs, if PSUs continue to participate, then it’s good for them and us. The Government has to encourage PSUs to recruit in this manner. Some of the PSUs feel that even if the IIM grads do not stay with them long-term, the new ideas they bring in are worth the big pay packages in the short term,” adds Barua.

The director of IIM-A actively wooing PSUs is a sure-shot sign of the changing times, and the pressures. Quite expectedly, the average salary at all IIMs fell precipitously by around 25 per cent. At IIM-Indore, for instance, the median was just Rs 9 lakh, compared to about Rs 11 lakh in 2008.

“It is not as rosy as it once was, but we have to deal with the situation head on. We had to make an extra effort to get recruiters in this year; nothing is easy. We had to do a lot of convincing; there were long conversations about the benefits of recruiting our students. The relationship that the institute had with alumni members played a dominant part in our being able to get companies in for Day One,” says another IIM-A professor.

Remember, it’s IIM-A we’re talking about—a B-school where once the biggest MNCs would pay top dollar just to be able to participate in Day Zero, the first day of campus recruitment.

Teachers at IIMs realise that the glory days of offers to the tune of Rs 18–20 lakh a year are well and truly over. “We have been trying to tell the students that they need to reconcile to the fact that those golden years are behind us. They would still like to think that those golden years will come back, but we really don’t. The students are becoming more realistic, and we want them to continue that way so that their expectations are somewhat moderated. Having said that, the packages are still not bad. In 2009, the average compensation package in tier II schools dropped from Rs 11 lakh to Rs 4 lakh, but in IIMs, it came down from Rs 17 to Rs 12 lakh, so relatively the IIMs lost less,” explains Barua.

At IIM-C, the placements this year didn’t compare well with the previous years’, but weren’t as bad as many in the batch of 2007 feared. “It went on for ten days instead of the usual five days, but all 265 students got job offers at the end of it,” says Paul Fabio, external relations secretary at IIM-C.

IIM-C reaffirmed its status as the most preferred campus in the country for finance. Forty per cent of the students chose finance portfolios, both in India and abroad.

Teachers at IIMs are also using the slowdown to make their students realise that a fat pay package is not everything in life. “We are urging students to take a more pragmatic view of salaries. The compensation package should be such that the student is able to pay back the loan he or she would have taken to finance the education. At Harvard Business School, the two-year MBA costs about $200,000 and the average package is about $150,000. Here, even with a reduced compensation of Rs 12 lakh, our fee is about Rs 8 lakh,” points out a veteran professor at IIM-B.

Post 2008, IIM students are reaching out to Indian companies, which have been relatively unscathed by the financial crisis. “Instead of focusing on a single portfolio like finance, we have increased the portfolio of recruiters to include industries like media, marketing and advertising. Based on the data, last year almost ten students chose entrepreneurial ventures; it was much higher than in any other year,” says Himanshu Nema, a second-year student at IIM-A and secretary of its PGP placement committee.

“The situation is slowly improving, but you also have to keep in mind the fact that from next year, the student intake at IIMs will be significantly more, and maybe we may also have to compromise on the quality of output. So the two factors are going to balance out. Having said that, a situation where we can’t place students is unlikely to ever happen,” says Barua, hinting at the impact that the government’s OBC reservations will likely have on the IIMs.

Additional reporting by Jaideep Majumdar

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Manju Sara Rajan